Six Flags Entertainment Corp (SIX) 2014 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Six Flags second-quarter 2014 earnings conference call. My name is Therese and I will be your conference operator for today. (Operator Instructions). Thank you.

I will now turn the call over to Nancy Krejsa, Senior Vice President, Investor Relations and Corporate Communications for Six Flags.

Good morning. This morning I'm with Jim Reid-Anderson, who is Chairman, President and CEO of Six Flags; and John Duffey, our CFO. And we appreciate you joining our call today. The call will begin with prepared comments from both Jim and John, and then we will open and take -- open the call and take your questions.

Our comments on the call will include forward-looking statements within the meaning of the federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in such statements, and the Company undertakes no obligation to update or revise these statements.

In addition, on the call we will discuss non-GAAP financial measures. Investors can find a detailed discussion of business risks and reconciliations of non-GAAP financial measures to GAAP financial measures in the Company's annual reports, quarterly reports, or other forms filed or furnished with the SEC.

At this time, I will turn the call over to Jim for his prepared remarks.

Thank you, Nancy, and good morning, everyone. I want all of our shareholders to know that I am really proud of our Six Flags team for delivering a record second-quarter performance for two main reasons. First and foremost, our guest satisfaction scores hit a new all-time Company high; and our primary goal is to have happy guests, and we are knocking the ball out of the park on that front. Second, we continue to deliver industry-leading financial performance with record revenue, record modified and adjusted EBITDA, and record EPS for the quarter. And we continue to set a new industry record with a trailing 12-month EBITDA margin of 40.1%.

At the same time, the team contended with the aftereffects of a long, harsh winter which impacted second-quarter attendance, particularly visitation by members and Season Pass holders in several ways. First, our spring-break attendance was softer than anticipated, as many weather-impacted schools shortened their breaks to make up lost school days.

In addition, some parks experienced abnormally cool temperatures and high amounts of rain during Spring Break.

Second, many schools extended their calendars until late June due to the high number of snow days during the winter.

Third, the harsh winter and late spring caused delays in the construction of several of our major new rides, pushing their opening dates to later in the second quarter and early third quarter.

We are well positioned and building momentum as we head into the back part of the season. Historically, approximately 60% of our attendance comes in the last six months of the year, and the 9% gain in our Active Pass space provides good support for the second half.

I continue to feel very good about our ability to deliver another record year in 2014 and to achieve our goal of $500 million of modified EBITDA by 2015. My confidence derives from our team's exceptional guest service, our superbly maintained parks, and our constant innovation. We have exciting new rides and attractions; and programs, such as the All Season Dining Passes and membership plans, that make our parks even more of a valued offering. Continued focus on these core areas provide the foundation from which we can further improve pricing and grow attendance.

Finally, it was also with great excitement that we signed a new international licensing agreement in China during the second quarter, following our first agreement in the Middle East. We anticipate that our partner will build multiple Six Flags-branded theme parks in China in the coming years. Our long-term strategy to expand the Six Flags brand outside of North America will provide a sustainable, valuable, and significant incremental long-term growth opportunity for the Company.

John, would you like to share a few more details on our second-quarter financial results now?

Well, thank you, Jim, and good morning to everyone on the call. We had solid revenue growth in the quarter, and while we would have preferred higher attendance, the strong guest spending per capita growth, solid Season Pass and membership sales, and higher active base continued to make us feel confident in our ability to deliver our fifth record year in a row.

The very strong growth in guest spending per capita we saw in the first quarter continued in the second quarter, with guest spending per capita up $4.21, or 10.7%. Year-to-date guest spending per capita was up $4.01, or 10.1%, with nice increases in both the admission and in-park spending.

Our per-caps are up substantially due to several factors. First, we raised ticket prices, as we have done for the past few years. Second, we have a greater mix of season day visitors, which have higher per-caps versus Season Pass and members.

Third, we have a greater number of guests on membership plans. After their initial one-year commitment, members pay us on a month-to-month basis. As many of these members did not visit our parks in the second quarter, but continued to make payments, we recorded membership revenue over the lower attendance base, which had the effect of increasing second-quarter admission per-cap.

As we mentioned on our first-quarter call, this season we have implemented ticket pricing initiatives across all of our ticket types. In addition, we continue to effectively and strategically manage the timing and duration of our discount offerings to further optimize our overall pricing.

We are confident in our approach to ticket pricing for three reasons. First, our ticket prices have historically been below market pricing and we know we have opportunity to close this gap, even while other theme park operators continue to further raise their prices. Second, our detailed guest surveys continue to indicate improvements in stores for value perception, while we concurrently achieve record high scores for overall guest satisfaction. And, finally, our Active Pass Base is up 9% to a record high, reinforcing our value offering and positioning.

The strong per capita spending, combined with international revenue from our two recently signed agreements, generated a $13 million or 4% growth in total revenue for the quarter. Year-to-date revenue was essentially flat to prior year.

Attendance declined by 670,000 guests in the quarter, due primarily to the areas Jim outlined earlier. The majority of the attendance decline related to lower visitation by Season Pass holders and members. The fact that our active base is up 9%, and that the bulk of our attendance decline was related to guests in that Active Pass space, indicates guests may have delayed their visit. You should note that, whether the visit was delayed or lost, we have either already been paid by Season Pass holders or are being paid monthly by members in our Active Pass Base.

We remain focused on driving incremental profit and cash flow and will always place that priority ahead of higher attendance.

We remain diligently focused on carefully managing our cash operating expenses. Year-to-date costs are flat to prior year despite some upward pressure on wages due to increases in minimum wage in several states, as well as some new costs related to our international initiatives.

Our focus on profit growth drove a $7 million increase in adjusted EBITDA to an all-time high of $145 million in the second quarter, despite the soft attendance. This is a strong reinforcement of the stability of our business. For the 12-month period ended June 30, 2014, adjusted EBITDA was $406 million, and our modified EBITDA margin was industry high of 40.1%.

Diluted earnings per share of $0.67 increased 43% over Q2 2013, while year-to-date diluted EPS was $0.05 versus a loss of $0.15 last year.

As many of you will recall, when we divested our ownership interest in Dick Clark Productions in the third quarter of 2012, we were required to escrow approximately $10 million of the proceeds until certain litigation was resolved. That litigation has been settled, and we received the $10 million in July. Accordingly, we recorded a $10 million gain in the second quarter. Although this did not impact EBITDA, it favorably impacted diluted EPS in the quarter and year-to-date by $0.06.

Cash earnings per share for the quarter was $1.03, an increase of $0.06 or 6% over prior year. LTM cash EPS is now $2.23. Return on invested capital increased from 13.8% at the end of 2013 to 14.2% at the end of the second quarter of 2014.

Overall, we are pleased with the strong per capita spending, the growth in our Active Pass Base, and the initiation of our international partnerships that will drive long-term growth for the Company. Like Jim, I remain optimistic about the balance of 2014. And with LTM modified EBITDA of $445 million through the second quarter, we remain solidly on track to achieve our goal of $500 million of modified EBITDA by 2015.

And now I'd like to turn the call back over to Jim.

Thanks very much, John. As we wrap up our prepared comments, I want to reemphasize my and our team's confidence in Six Flags. While weather impacts and consumer behavior are not necessarily consistent from quarter to quarter, this is a resilient business with strong recurring revenue, and it is always important to measure performance across an entire season versus any single quarter.

Strong momentum of our Active Pass base, along with our pricing strategy, provides us with excellent long-term growth opportunities. In addition, our international strategy will provide an incremental leg of growth for the Company above and beyond our base business.

The Six Flags brand is unique and incredibly strong worldwide. We have the chance to strategically drive ongoing and expanding revenue, profit, and cash flow growth with modest incremental investment.

In summary, our focus remains on delighting our guests, leading the industry in innovation, implementing efficiencies in our operations, and investing in our people. We will build shareholder value by investing in and consistently growing the business, while returning excess cash to shareholders through a stable and increasing dividend and ongoing share repurchases.

We are positioned very well for the future, both strategically and operationally, and we are on track to deliver $500 million of modified EBITDA by 2015.

Therese, at this point could you please open up the call for any questions?

(Operator Instructions). Ian Zaffino, Oppenheimer.

The question would be on the revenues. I'm just trying to think about this from a higher level here. So, attendance, or I guess revenues for the second quarter were un-impacted by the weather. Is that correct? Just given that you had a lower attendance but the revenues are amortized over a smaller base, so your admissions would be higher -- or per-guest would be higher -- so it blends to have no impact on revenues? Is that right?

So if you just take weather, per se, and compare the weather this second quarter to the weather last year's second quarter, it's actually incredibly similar. So there was no benefit; there was no negative versus prior year. However, there were impacts related to the a very long and snowy winter that had, in essence, long tentacles that stretched into the second quarter, impacting school calendars both in the Spring Break period and at the end of the season. So, that was the weather effect.

With regard to the revenue itself, you described it well, and John can give more detail.

Ian, as we've talked about before, how we -- the shortfall in attendance was primarily due to Season Pass and members. As we've mentioned in the past, how we account for revenue for Season Pass and members is that we estimate the visits per pass; and then as those folks come to the park, we'll recognize a piece of that revenue. So you're absolutely correct. To the extent that there was some softness in our Season Pass and member visitation in the quarter, that would mean less revenue that was recognized.

Okay. So I guess this is to the point that you've been making for the past several years, to really look at overall revenues and overall EBITDA as opposed to really breaking down the components of price versus volume.

That's right.

I think one of the complicating factors in now, Ian, which is I think what you were getting at, is that with our membership program, for those members that have been with us more than 12 months, we're now at the point where we recognize their revenue monthly. And so that gives us incremental stability in revenue recognition, as long as they stay with our program, which they have been doing.

Right, okay. Thank you very much.

Afua Ahwoi, Goldman Sachs.

Two questions for me. First, on the slow start to the season: is there any data points or anecdotes you can give us that would suggest that maybe folks will show up in the back half of the year?

So maybe for example, is there a percentage of season Active Pass that changed this quarter versus last quarter, or versus year-ago quarter? And is that a lesson -- maybe we can see, maybe if they still want to make their four trips a year, does that mean they have to come more times in the second quarter?

And then maybe just sticking on that point, if you can maybe give us then how much of the non-Active Pass members our non-active visitors grew, if they did.

And then just curious, is there any way for us to get a sense of how much you benefited this quarter from international development fees from some of these license -- from these new agreements you signed? Thank you.

So, I'll take the first part and maybe, John, you jump in as well. I think that you know, Afua, we do not comment on interim results, so we will not comment on July or the current quarter.

What I can say is what I said in my prepared comments, that 60% of our attendance generally sits in the second half, and all of the schools are now out. And we feel very positive about the balance of the year, but I will not comment specifically on the second quarter.

The other very compelling factor is what I mentioned earlier, which is that we have, in essence, a 9% higher active base of members and Season Pass holders. That's a record high for the Company. In the history of the Company, we've never had that many Season Pass holders. And so people are spending money. They've either given us the cash, or they are paying us monthly. And we feel pretty good about that position and what it will mean for the balance of the year.

Afua, on your international question, if you look at the financials that were provided in the press release you'll see that the sponsorship, licensing, and other fee line, which would include international, is up $5 million in the quarter, and that is primarily the result of the international.

Okay. And then I can maybe -- if I just had one more question I wanted to clarify. Following up from the question before, which was saying because they didn't show up, you've already amortized some of their spending, maybe there wasn't that much of an impact. But you have missed out on the in-park spending for those who did not show up, though, right? So there is still some impact, I would think.

Let's be clear: there are several factors. If Season Pass holders do not show up, we get no ticket revenue. We don't register that. And we don't, until they show up -- or until the end of the year, if they don't come at all, then we'll obviously recognize what they've paid us.

Yes.

We don't get any of the in-park spending if they don't show up. We cannot recognize that revenue. The only revenue that we can recognize, and this is what Ian was referring to earlier, is the revenue that equates to members who have been with us for more than 12 months, and who are paying us monthly. That revenue on tickets we can recognize monthly. We cannot recognize any in-park revenue. So we are very careful with revenue recognition to ensure that we are following all appropriate accounting principles.

John, do you want to add to that?

I think that covers it.

Okay, thank you.

Barton Crockett, FBR Capital Markets.

I wanted to get at the per-cap thing slightly differently, if we could try. I was wondering if you are able to break down, of the 11% admissions revenue per-cap growth, what portion came from the mix change to day versus season and member? What portion came from this effect you cited of people having a monthly membership and having revenues amortized in, whether or not they showed up? And then how much was just pricing?

Yes, let me start off by saying that all of those impacted the guest per-capita admission. But the primarily -- the increase was primarily due to the pricing initiatives that we had taken, which are in the mid- to high-single-digits across the board. That is on both Season Pass and one-day tickets. So, that was the primary driver.

Now, there is a favorable impact, as you said, associated with mix, where we did have a lower mix of Season Pass and members. And we said for some time now that the higher the mix is on Season Pass and memberships, that puts downward pressure on per-caps. So we did see a little bit of a reversal on that in the quarter.

And then the last thing would be, as you mentioned, the memberships -- the members that are beyond their initial year, where we're recognizing revenue where they may not have visited a park. But I would say the primary driver is pricing.

Okay. So would it be safe to say that the delta between pricing and 11% is really these other two factors, mainly?

We're not going to comment on the breakdown of the 11%.

Okay, all right. All right. And then on the attendance, I was wondering if you could give us a little bit more granularity on the decline. Was that mainly in the season break weeks? And, if so, can you tell us which weeks those were; and, also, the week or so that school was extended?

We're not going to break down which weeks or which months were most affected. But we can tell you that in the majority of our markets, the school calendars were extended. And it primarily impacted the East Coast, the Midwest, and Texas. And they were extended during the Spring Break and into June. And, in fact, for example, New Jersey basically came out of school at the end of June. In several of our markets, including Mexico -- which wasn't as impacted by the weather -- but they had an extra week. They came out of school last week.

We have markets like St. Louis that just at the end of the season added 14 school days. And several of our parks had double-digit school days added on, so it was a broad impact that we certainly did not anticipate. It was disappointing that it happened. But the benefit that we see is that with the stability of our business, with our growing active base, we can deliver very strong performance. Even while seeing our attendance down by high single digits, we've delivered record revenue, record profitability. And as attendance comes back, we feel very positive for the long-term outlook for the Company.

Okay. But you guys also -- did Easter benefit you in the quarter?

Again, we're not going to say Easter benefited; didn't benefit. We saw an impact from early on in the quarter from this Spring Break issue that I described just now.

Okay, all right. I'll leave it there. Thank you very much.

James Hardiman, Longbow Research.

So just to maybe piggyback on that last portion of the question, I think you had quantified the attendance shift from Easter break out of 1Q into 2Q at about 300,000 guests. I believe that's the number you had given us on the first-quarter call. Is that then not -- did that number not transpire? At the end of the day, just given all the other weather stuff, we should no longer be adding that number to how to really think about the attendance decline. Is that fair?

Yes, I think as you look at the attendance from the Spring Break shift, we did -- as Jim indicated, there were a number of schools that added some days to the Spring Break because of the snow days in the winter, so that had an impact; as well as, we know we did see some very cool and wet weather in a number of our locations. So that did adversely impact the Spring Break.

So there's no doubt that there was a shift in Easter that would have had some sort of positive effect. And we're not going to quantify to say, okay, this is the net number, but it certainly didn't have the effect that we had hoped for and anticipated.

Got it. And then with respect to the extended school calendars, it sounds like you're saying that weather was very similar to what it looked like last year. But you're also saying that you didn't have nearly this number of extended calendars, from a school perspective. Any ideas why that's the case, if weather was fairly similar; and how we should think about that when we fast-forward to next year, what weather has to look like for the calendars to go back to normal?

So, James, I think that you're making the assumption that the bad weather was in the second quarter. The weather in the second quarter was very similar to last year; maybe just slightly better, this year versus last year, but very similar.

The issue for school wasn't the second quarter; it was the long, harsh winter which you would've experienced -- anyone on the East Coast would've experienced -- Midwest. It just went on and on: very heavy snow; snow sat around for long time; impacted a lot of people. So the schools extended their -- cut back the Spring Break and extended into June, and in some cases into July.

Got it. Okay, so it was more an issue that first-quarter weather was meaningfully worse than last year (multiple speakers).

Precisely. And I think what we didn't anticipate on the last call, for sure, was that it had those long tentacles that stretched into the second quarter.

Okay, great. And then just two more quickies for me. Can you give us any granularity on which rides and were delayed, and until when? And then just lastly, the $5 million increase in your sponsorship and licensing, you talked about that being driven by some of the international opportunities. Should I think about that more as a one-time benefit? Is that sustainable as we move forward? Just how should I think about that line item going forward? Thanks.

So the rides that were delayed in 2014 came about primarily because of the harsh winter, the long winter, and they were delayed between one and four weeks beyond Memorial weekend. And they were fairly big rides for us: Zumanjaro in New Jersey; Goliath in Great America; our new Hurricane Harbor at Six Flags Over Georgia; and Medusa in Mexico.

And if you go back to last year in the same time period, we only had one delay, which was for our new ride, Full Throttle, in Magic Mountain. So there was definitely an impact on some substantial new rides. And as I said, they ranged from 1 to 4 weeks in key markets. And it's feasible, certainly, that especially Season Pass holders and members who would want to come and ride these rides might have said, we'll delay and visit later when they're open.

Now, John, do you want to talk a little bit about the international fees? We don't actually give guidance.

No, we don't provide guidance, so I can't talk to what our expectations are going forward. But we feel very good about these partnerships that we have entered into. We talked quite a bit about this being a very good growth driver of our long-term business. And although I can't speak to the specifics in terms of what those numbers would look like on a go-forward basis each quarter, you should expect to see international revenue each quarter going forward.

Got it, thanks.

Tim Conder, Wells Fargo.

Just wanted to continue on. I have the same question that James was asking on the international revenue. Could you give any color as to -- was there a significant maybe one-time, up-front, initial fee here related to Dubai, and then anything related to your partner to develop the parks in China? I guess that's one question.

And then on your Active Pass holder base, any color that you can give on the current mix between the membership and the Season Passes? Again, you commented how a good, strong 9% growth was going on there, but any color along that front.

And then, I would say, on the weather front, the lingering effects of the schools getting out later -- we've even heard a little bit of that from some of our power sports companies mentioned that, that some sales are deferred because people are taking vacations later, due to the later school. So it's definitely impacting multiple areas.

Okay, on the international front, I think you heard John say we don't break out revenue. But what I would say is the revenue that we recognized is primarily tied to deliverables prior to park opening. So it's not going to be equal every quarter, Tim, but we do anticipate some fees every quarter because we're going to be working on an ongoing basis on a number of parks. And over a period of time, we believe that that will grow very nicely.

Does that give you -- I know it's not exactly the detail you'd like, but it really depends, and come from three sources: it will be the design and development of the parks, licensing fees, management services. And it's coming from both China and the Middle East now, and we believe over time we can expand that further.

Now, John, do you want to talk about the active base and member and --.

Yes, as it relates to the active base, we do not break out the split between the Season Pass and members. What I would tell you is that we are very pleased, very pleased, with our membership program. We've seen a number of people that have taken the opportunity to become members. And although we're still in the early stages of our members going to that 13-plus month, we're very pleased so far with what we've seen in terms of overall retention.

And I think, Tim, there was a key point that John made there that I think is very encouraging, in that if you think about the stability, as I talked about on the revenue base, but we had discussed earlier, we only opened up this membership program early last year. So the portion of folks who are over the 13 months is relatively small in the overall scale of things, but growing, and will only grow over time and really help to deliver stable, reliable revenues.

Okay. And, Jim, to your point there, this has only been in effect a little over a year. But how are attachment rates of parking, of meal passes, and things like that to the membership and Season Passes to date versus your expectations?

Actually, we have seen a very nice throughput in terms of people upgrading their passes; very pleased. When you think about it, when they're paying on a monthly basis, just for a few cents more they can upgrade to a Gold Pass, they can upgrade their parking. So one of the nice things that we've seen about memberships is not only does it increase our overall active base, but it helps on our retention. And people have a tendency to upgrade to a higher-priced pass because of the fact that they are paying monthly.

I think, incrementally, it's very encouraging to see the number of people that are taking the All Season Dining Pass that are members or Season Pass holders, and are either paying that up front or monthly. But the beauty of it though, Tim, is that we've seen very good penetration; but we've got a huge opportunity still ahead of us, in terms of what there is still to do on that front.

And then one last question, if I may. Group business, any commentary there, how that's trending year to date?

It's been fairly stable. We're very close to record levels, and very encouraged by what we're seeing. But, again, we don't give any forward guidance.

Okay. Thank you, gentlemen.

(Operator Instructions). Steven Kent, Goldman Sachs.

Just to follow up on Afua's question, I guess a couple parts to it. First, if a Season Pass customer is not using their pass as actively, year-to-date, doesn't that have some propensity for their likelihood for renewal? And are you doing any active programs to get that customer to come in in the second half of the year?

And second question is stock active -- just so you know, is trading lower this morning. Can you just give us some sense whether you have any restrictions on your share buyback program, or when you can become active in that?

Yes, I think very good questions, both of those, Steve. And with regard to Season Pass holders, obviously we want them to visit for numerous reasons, including we want their in-park spending. So we do have active programs. We have the best program in the industry in terms of targeting, directly, customers. And as I mentioned, our active base is at an all-time high and growing.

So, they are out there; they are buying passes, and they are buying passes right now; and most of the passes have been bought in the last few months. So it's not like they are not interested in the Company; they've been very active in support of the Company.

And we continue to target those members who have been with us for more than 13 months in ongoing communication about what's going on at the Company, and we have special offers regularly to try to incent people to come in. And we believe those are working, and will continue to work.

So, it is something that we do on an ongoing basis, and we are stepping it up even further to ensure that as we roll from one year to the next that we see a continued momentum build on Season Pass holders and members. A 9% growth I think is a phenomenal growth, and it will be interesting to see how other industry players compare in terms of that growth rate.

With regard to the stock, we obviously look at it, and when we see it trade down it presents an opportunity.

John, did you want to talk about what flexibility we have?

Sure. And as you look to our historical pattern in terms of share repurchases, because of the fact that a lot of our cash is generated in the second and third quarter, and we have limitations in terms of restricted payments under both our bond indenture as well as our credit agreement, we tend to have more share buybacks in the third and the fourth quarter because of those limitations.

So, we've talked before about all of our cash will go to both dividends and share buyback. That has not changed. We've talked before about our expectation in terms of share repurchases being in the $130 million to $150 million range this year, and we're right on track to do that.

Okay, thank you.

James Hardiman, Longbow Research.

If we cut through all the noise created by the weather and the school calendars and everything else, you had a really sizable spending increase in the quarter. How do you know if that was maybe too much? And, ultimately, do you think that the big price increase was one of the factors that led to the sizable attendance decrease? How should I think about the interplay of the two, and what you've learned here?

So, when you say spending increase, you're referring to the increase in the per-caps?

Yes, I apologize. The mid- to high-single-digit per-cap increase on the tickets, exclusive of some of the mix stuff going on here.

Yes, I think that it's a fair question to say, how is pricing playing into the overall mix here? And in general, just to give you some background, we raised single-day and Season Pass pricing in the mid- to high-single-digits. It's a little bit higher than the rate we've been at over the last few years.

We also have continued, and will continue, to manage discounts away from our peak demand periods. We really believe that guests recognize the tremendous value of our offering, James. And that's been demonstrated, and continues to be demonstrated currently, with our overall value ratings.

We now are measuring 1 million guests, and value ratings in 2014 from those guests show an all-time-high value perception. We are absolutely convinced that this attendance shortfall is due to fewer visits by Season Pass holders and members mainly. And it's primarily due to the school calendar and these weather issues, not pricing. There may be a little element, but it's small.

And when you think about it, if you look at the supporting factors there, Active Passes at a higher price point are up 9%. And we have to look at this and assess what the facts are. We're not making any assumptions about what happens in the balance of the year. But it seemed to us that given those dynamics and the strength in that active base and the strength in value perception and guest satisfaction scores, that we will see some sort of comeback in the second part of the year. We won't assume it, but we feel pretty good about our ability to continue and to deliver another record year.

That's very helpful.

And, James, Jim had mentioned before about not only are we seeing very nice sales of Season Pass and membership with our active base up, and if pricing was an issue we would see a decline in that. That's not occurring. But also the group business that Jim referenced earlier, which has been strong as well, and we've been taking pricing in that area. So, we think that if you look at the attendance shortfalls, it really is due to the visitation patterns by our Season Pass and members.

Very helpful. And then the per-cap benefit that you guys received from the greater number of monthly membership guests -- as we work our way into the season and those people show up, and you are then recording just the monthly, does that become a little bit of headwind to pricing as we move forward? And, if so, is it at all material as we think about modeling the rest of the year?

Well, I would say that there is an impact associated with that. I wouldn't say that it would be material, but you're absolutely right. To the extent that as we recognize this revenue on a month-to-month basis, if they are not visiting the park, that has a positive impact on per-caps. When they do visit the park, then that actually is going to put downward pressure on the per-caps.

But as a percentage of the overall base, it is still fairly small. Over time, it may impact quarters more materially. But at the same time, what it will do is it will provide stability in our quarterly revenue base.

That's what I thought. And then just lastly for me, obviously you're limited in terms of what you can talk about right now with some of the international growth opportunities here. How should we even think about the news flow with some of that business? Are we going to hear about parks, you think, before the end of the year -- specifics there? And are you ever going to share the economics as to how those deals work, or is that just something that we'll just have to guess on? Thanks.

James, unfortunately, we'll never share those economics, and we're trying to protect our shareholders in doing so. If you think about it, we're negotiating with parties; and if the economics were out there, it really limits our room for maneuver. What I can say is it's a very good business, very lucrative, with no capital investment on our front. And so it's really a good business to be in, and we will see growth.

With regard to sharing more about it, on every call we'll do our best to get as much information as we can. And, over time, if it becomes a bigger piece of the business, that will become more and more important. But unless there's some big news with regard to a park, we won't be breaking out any details.

Got it. Thanks, guys.

Barton Crockett, FBR Capital Markets.

I was wanting to follow up on the international licensing. You called out $5 million of revenues. You also said there was some expense impacts. Can you comment on the margin? These could be very high-margin revenues, or not, and I was just wondering if you could give us some color on that.

That's a good question, Barton. John?

Yes. Barton, it is extremely high-margin. In terms of the overall costs that were in the quarter, it was less than $1 million.

Okay. And then in terms of the pace, the revenues from -- I would assume your Dubai deal come within a quarter or two of seeing news on it. You had your China deal. Can you comment on the possibility of a similar kind of separation between announcement and revenues on the China deal, in terms of timing?

You're talking about commenting on future deals, is that the question?

Well, no. You have revenues this quarter; I assume it's from the Dubai deal that you announced before it --.

No, it's from the Dubai and China deals.

It's both.

Both, okay.

And I think that's just part of the comment that I was trying to make earlier that the revenue we recognized is tied to deliverables on those three points that I made: the design, development, licensing, and management services.

Yes.

And so we're able to recognize revenue as work is done, and we are working on both projects.

Okay. All right, great. Thank you.

Thank you. And at this time there, are no further questions.

So, thank you very much, Therese. Now, for those of you that haven't already got your Season Pass, please go get one now. It really is the perfect time to visit our beautiful parks this season to experience all that we have to offer.

And as I was talking earlier about some of the new product that we have out there, I do want to say that similar to the last three years, we have introduced something new at every single park this season. Several of our rides have received national and even international media coverage, including both of the rides that I talked about earlier: Goliath in Chicago, the fastest, steepest, tallest, wooden coaster in the world; and at Great Adventure, Zumanjaro, which is the tallest drop ride in the world, at 415 feet.

Both amazing -- and I can tell you personally that the experience, with the spectacular views at the top of these rides, heart-pounding drops, just incredible.

And those are only a couple of the new offerings. Whatever park you'll go to, you will have something new.

So, thank you very much for joining us on our call today. You can rest assured that our team is focused on delighting our guests and creating incremental shareholder value in the years ahead. Take care.

Ladies and gentlemen, thank you for joining today's conference. Thank you for your participation. That does conclude the conference. You may now disconnect.